Grab users in Singapore can now pay for its services with cryptocurrencies following its tie-up with crypto payments provider Triple A. With this new feature, stablecoins and other digital assets can be converted into usable funds for GrabPay.

Users can top up their GrabPay e-wallets using five cryptocurrencies: Bitcoin, Ether, StraitsX’s Singapore dollar-backed stablecoin XSGD, a United States dollar-backed stablecoin USDC that is managed by global payments firm Circle, and stablecoin Tether, also known as USDT.

According to Triple-A, the crypto top-ups in Grab Pay Wallet were first rolled out on March 12. “From arranging deliveries to booking rides or paying for coffee at their nearest shop, digital currency owners in Singapore can now use digital currencies for everyday transactions,” the payments provider added.

Crypto are only available in Singapore for now, however, Grab will “continue to monitor user adoption and respond to demand for such services.”

This partnership builds upon the super app’s previous collaboration efforts with Triple A. In 2021, Grab’s partnership with Triple A saw GrabPay wallet being added as one of the payment options to top up the latter’s trading platform wallet.

Grab has actively worked to bring crypto into the mainstream. Last year, the company introduced a Web3 feature that allowed users to earn blockchain-based rewards and pay for restaurants and services with NFT vouchers during the 2023 F1 Grand Prix.

The superapp also collaborated with StraitsX to test the issuance of Purpose Bound Money in the form of commercial digital vouchers during the Singapore Fintech Festival (SFF) 2022.

According to sources who spoke to The Straits Times in late 2023, Grab has plans to apply for a digital payment token licence from Singapore’s regulator.

Featured Image Credit: Bryan van der Beek/Bloomberg

Disclaimer: Opinions expressed below belong solely to the author and do not constitute financial advice. At the time of writing the author had no holdings in cryptocurrencies.

The day long-awaited by crypto fans is finally here. The American Securities and Exchange Commission finally approved the first spot Bitcoin ETFs for trading in the US.

If you’re unfamiliar with the terms, ETF (exchange-traded fund) is a fund that makes investment decisions on its own, usually holding a diverse mix of different assets, and all you do is buy a share in it as if you purchased a share in a company.

From today, Bitcoin can be a part of its portfolio, with 11 funds explicitly dedicated to BTC approved for launch today.

Why it’s such a big deal

The main consequence is that someone can now pour trillions of dollars invested in America into the cryptocurrency.

Until now, if you wanted to invest in BTC, you had to buy it, which typically involved setting up an account on one of the exchanges (like Coinbase, Binance or the ill-fated FTX), creating a digital wallet, transferring and converting fiat and trading the coin there.

This process meant you had to put some effort and interest into the endeavour, and — as exhibited by FTX’s spectacular implosion in 2022 — involved insignificant risks.

From today on, however, Americans can invest in Bitcoin simply by buying shares in one of the traded funds that hold it. Many may not be aware of the exact composition of an ETF asset sheet and still have a portion of their money placed into the leading cryptocurrency.

This is a big deal since the latest figures put American household holdings of financial assets at over US$112 trillion, including over US$43 trillion in stocks. Exchange-traded funds hit a record milestone in December, surpassing a combined US$8 trillion in assets under management.

American households held $112.4 trillion in financial assets as of Q3 of 2023 / Image Credit: Federal Reserve Bank of St. Louis

Meanwhile, even after last year’s significant gains, Bitcoin’s entire market capitalisation is still only around US$900 billion. 

As you can see, then, many crypto optimists are expecting that even a tiny chunk of this massive investment pie could trigger a quick appreciation of BTC, elevating it to — or beyond — the record highs recorded in 2021, when the coin’s price briefly hit over US$65,000.

To the Moon…

This is why Bitcoin seems so well-positioned to go up in value.

Yes, Bitcoin ETFs are nothing new globally, and even the US has approved some funds that used Bitcoin futures (an instrument that tracks the future price of the coin), allowing people to trade in BTC-linked assets for the past two years.

But the sheer scale of the American market, coupled now with the permission for funds to hold Bitcoin directly, has the potential to unlock a flood of money that could revive the boom of 2021.

As the trading on the first day draws close, the volume across all 11 approved funds has hit US$4.6 billion, already proving high demand.

This is definitely ground-breaking, there was no doubt demand would be strong for these ETFs, but the numbers across the board are impressive.

Athanasios Psarofagis, ETF analyst at Bloomberg Intelligence, Bloomberg via Yahoo

Bare numbers, then, and market circumstances seem to be on Bitcoin’s side. However, not all is so rosy.

…and back to Earth

First of all, the impact on the price of Bitcoin is, as ever, going to depend on the anticipated future price of the coin. The basic rules of investing don’t disappear simply because more money may have access to a particular asset.

Secondly, Bitcoin’s fundamental flaws are still there. So far, the token has no real utility and is held purely as a speculative asset. There’s no data — beyond solely technical signals — that you could use to predict future price moves reasonably.

Traditional currencies typically rely on broad economic information, including GDP growth, trade, debt, inflation and so on, to determine the price of each currency vs. another one. But no such statistics exist for BTC because it’s not used for any real purpose outside trading.

Finally, it has already appreciated quite enormously over 2023, and a good deal of this growth happened since October after the SEC lost its legal battle with Grayscale Investments, which sued the commission after being refused a conversion of its existing trust into a spot-traded ETF.

Throughout the year, even before the final ruling, other companies have filed their applications, including the heavyweights from BlackRock or Fidelity.

In other words, 2023 has been a year of anticipation that has already drawn considerable investment, elevating BTC price by over 150 per cent to around US$45,000.

Paradoxically, the best way to make money on Bitcoin ETFs may have been before they launched.

This would explain the coin’s timid response to the funds’ launch, with a brief jump following the Wednesday announcement and no meaningful movement since.

As of now, it is still about 50% off its 2021 peak of US$65,000. But is it enough of an upside to justify the risk that it might just as well go down by as much? After all, it was just a year ago when it was still under US$20,000.

There are those, of course, who believe it may reach US$100,000 or more, but the basis for this optimism is, at best, a notion that people will once again go crazy for crypto as they did 2-3 years ago.

Since then, however, many have been badly burnt, and following the subsequent implosion of the NTF market, there’s been no new promise of utility for any cryptocurrency.

With the approval for publicly traded Bitcoin ETFs, investing in crypto may have become safer and more regulated, but the fundamental risks remain the same.

Singapore doesn’t look too favourably upon cryptocurrencies, but it’s still paving the way for the adoption of digital assets.

When it comes to cross-border transfers and a more efficient banking system, the Monetary Authority of Singapore (MAS) is placing its faith in stablecoins, CBDCs, and tokenised bank liabilities rather than Bitcoin and Ethereum.

As MAS’ Managing Director Ravi Menon explained at the Singapore Fintech Festival 2023, cryptocurrencies have failed the test of digital money, but these other asset classes could prove suitable given the right infrastructure and regulations.

Earlier in August, the MAS announced a regulatory framework addressing the value stability of stablecoins. This issue has taken the spotlight a number of times over the years, ever since the emergence of coins such as USDC and USDT, which are meant to be pegged to the US dollar. 

In 2021, Tether – the company behind USDT – was fined millions of dollars for false claims that its stablecoin was fully backed by fiat currencies. Tether misled consumers into believing that the amount of USDT issued was equivalent to the amount of US dollars which the company held. This would ensure liquidity and allow USDT to be swapped at a rate of US$1 at any given time. 

In reality, the Commodity Futures Trading Commission (CFTC) found that Tether held sufficient reserves for less than 30 per cent of the days between 2016 and 2018. Since then, the integrity of stablecoins and the transparency surrounding their reserves has come under scrutiny. 

Singapore’s solution for stablecoins

The MAS’ regulatory framework for stablecoins specifies a set of requirements, which issuers of stablecoins must meet. This includes criteria around the minimum reserves, which must be held and disclosures that must be provided to holders.

Issuers also have to ensure that their stablecoin can be exchanged for the underlying fiat currency within five days of a request being issued. 

As it stands, StraitsX and Paxos have received in-principle approval to issue MAS-regulated stablecoins. For StraitsX, this includes XSGD, a Singapore dollar-backed stablecoin which was first issued in 2020. It also includes the US-dollar-backed XUSD stablecoin which is due to be launched in the near future.

Meanwhile, Paxos is set to issue a new US dollar-backed stablecoin as well, in partnership with enterprise clients in Singapore. 

Regulation will absolutely play a key role in shaping the development of the stablecoin market. Countries such as Singapore and Japan have recognised that stablecoins can play a foundational role in the digital asset and broader Web3 ecosystem. Their policy frameworks are aimed at creating space for high-quality stablecoins to take root.

– Chengyi Ong, Head of APAC Policy, Chainalysis  

With its regulations, the MAS could help provide stablecoins with the legitimacy needed for them to take on the role of digital money. Investors would have the reassurance that coins such as XSGD and XUSD are just as safe to hold as their fiat counterparts. 

Growing demand for stablecoins

As the demand for crypto assets begins to rise yet again – with Bitcoin fund inflows surpassing US$1.5 billion this year – stablecoins are picking up right where they left off.

“Stablecoins are the backbone of the crypto economy. They are the most widely-used type of crypto asset,” explains Chengyi Ong, Chainalysis’ Head of APAC Policy.

According to Chainalysis data, more than half of all on-chain transaction volume to or from centralised services between July 2022 and June 2023 took place in stablecoins. “Growth in stablecoins will support broader crypto activity, and vice versa.”

Stronger regulations will contribute to this growth, inviting institutional participation and facilitating the use of stablecoins in a wider variety of transactions. 

“Transactions involving USD-backed stablecoins reached nearly US$6.87 trillion in 2022, surpassing the volumes of Mastercard and PayPal,” Ong says. “If institutional and retail adoption continues, we could continue to see stablecoins accounting for a larger share of on-chain value transfer.”

Stablecoins backed by commodities

Currently, MAS’ stablecoin regulations only address single-currency stablecoins (SCSes). These refer to stablecoins which have values pegged to a fiat currency such as the Singapore dollar or US dollar. 

SCSes are the most commonly used stablecoins today, however, there are other forms which have emerged in recent years as well. This includes stablecoins pegged to precious metals such as gold and silver. 

For example, each of Paxos’ PAXG tokens represent one fine troy ounce of gold stored securely in a vault in London. This offers a convenient way to invest in gold as there are no storage fees, the minimum purchase amount is extremely low, and transactions are settled almost instantly. 

Commodity-backed stablecoins could help make traditional assets more accessible and ease the investing process.

“These tokens represent a much smaller market share today. Whether they grow in popularity will depend on the value they provide to end-users, as well as the regulatory frameworks that will be established around them,” Ong explains. 

Featured Image Credit: Composite Ledger Insights, elements 123rf

Also Read: “Cryptocurrencies have failed the test of digital money”: MAS’ MD Ravi Menon on the future of fintech

Malaysian crypto startup CoinGecko announced their acquisition of London-based Non-Fungible Token (NFT) data infrastructure and intelligence company Zash on Wednesday (November 22).

This strategic acquisition is aimed at expanding CoinGecko’s cryptocurrency offerings, solidifying its position as the go-to data aggregator for both fungible and non-fungible tokens.

Zash was first established by CEO Parit Patel and CTO Efe Surekli in 2021 at Entrepreneur First, and has quickly become a key player in the NFT space. Covering 87 unique marketplaces on Ethereum, Polygon, Binance Smart Chain, Solana, and Bitcoin Ordinals, Zash provides enterprise-grade, indexed NFT data.

TM Lee, CEO and co-founder of CoinGecko, said that the acquisition aligns with their commitment and dedication to delivering value to the crypto community with a unified token and NFT market data offering.

After evaluating all existing NFT data providers in the space, Zash stands out as unparalleled. Within
three years, they have built a remarkable product with the most comprehensive NFT data coverage in the market, and commercialised with top tier clients with a lean team.

– TM Lee, CEO and co-founder of CoinGecko

Zash’s curated datasets and composable Application Programming Interface (API), known for enabling the rapid development of complex blockchain data applications, have attracted notable Web3 projects like NFTfi, Metaversal, and Metaquants (now known as Astaria). These projects, which rely on Zash’s data, will now become part of CoinGecko’s expanding client base.

Parit Patel, CEO of Zash, expressed excitement about the acquisition, stating in a media statement that CoinGecko is the ideal home to preserve the legacy of what they’ve built.

We believe that NFTs will continue to evolve and unlock new use cases globally, creating value for companies and consumers. We foresee our NFT data infrastructure — well-positioned at CoinGecko —playing a pivotal and impactful role in shaping the industry’s future.

– Parit Patel, CEO and co-founder of Zash

Looking ahead, CoinGecko plans to integrate Zash’s NFT data into its API offering by the second quarter of 2024, providing users with a seamless experience to access both fungible and non-fungible token data. Additionally, the data will be gradually incorporated into CoinGecko’s existing NFT floor price tracker in the coming year.

Featured Image Credit: Bobby Ong’s X profile

Disclaimer: Any opinions expressed below belong solely to the author.

Binance’s legal saga with the US authorities appears to be coming to an end as the company has reportedly agreed to pay a massive fine of US$4.3 billion while its founder and CEO, Changpeng Zhao, stepped down yesterday — likely to avoid a possible prison sentence — and is expected to pay an additional criminal fine of US$150 million.

CZ reportedly told his employees that it was “better to ask for forgiveness than permission”, and failed to comply with US laws, allowing billions in transactions with sanctioned countries (Iran, Cuba, Syria and Russian-occupied regions of Ukraine), terror groups like Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS), as well as criminal organisations, which used the platform to launder ill-gotten money from their activity around the world.

Not only did the company fail to control who is using the platform, but on occasion, provided advice to certain VIP users at risk of suspension on the basis of the sources and volumes of their transactions, making Binance directly complicit in criminal activity.

This is the crux of the indictment against the company, which was unsealed before US Attorney General Merrick Garland’s conference yesterday.

From NTU, MAS, and SGX to Binance

The settlement mandates that the company appoints a compliance monitor to ensure it abides by its terms and adheres to American laws. It also cost CZ his executive role in the company and barred him from involvement with its business operations until three years after the monitor’s appointment.

As a result, Binance’s founder announced his resignation on X later in the day:

Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.

Binance is no longer a baby. It is…

— CZ ? Binance (@cz_binance) November 21, 2023

His replacement is Richard Teng, a Singaporean who joined the company in 2021 as the CEO of its Singapore business before moving up to become the global Head of Regional Markets.

His career started with an accountancy degree from Nanyang Technological University (NTU), back in 1994, followed by a Masters in Applied Finance from the University of Western Australia.

Upon completing his studies, he joined the Monetary Authority of Singapore (MAS) for a successful 13-year stint, during which he ascended to the role of Director of Corporate Finance before transferring to the Singapore Exchange (SGX) as Chief Regulatory Officer between 2007 and 2015.

After leaving Singapore and immediately before joining Binance six years later, he served as the CEO of the Abu Dhabi Global Market financial centre, which, during his tenure, began attracting crypto companies seeking to operate out of the UAE.

It’s quite likely that it is his background in financial regulation, having experience with the inner workings of Singapore’s central bank as well as SGX, where he was charged with regulatory matters opposite MAS, that made him an excellent candidate to take over at the helm of Binance during a time of great turmoil caused by loose adherence to American laws.

What Binance, still the king of crypto exchanges, needs now is some tranquility, and the new CEO seems to be very well-positioned to deliver it.

CZ may have been right in the end

While having to pay US$4 billion in fines may sound like a harsh penalty, it may very well be that Binance’s founder was right about “asking for forgiveness” instead of permission in the end.

Even if the amount both he and the company have to cough up is larger than the money made from various illegal transactions, they have certainly contributed to Binance’s popularity and added trading volume to its figures, making it appear larger than it otherwise would have been, adding to its perceived value.

The ruthless logic of business surely was that if they didn’t take that piece of the cake, then somebody else would. Given that Binance remains in business and CZ himself was only suspended from engaging with it for three years — while retaining his stake making him worth over US$10 billion — it seems that the settlement is really just a slap on the wrist. Maybe a bit stronger than usual, but little more than that.

It’s going to be interesting to see if this case ends up encouraging rather than deterring illegal behaviour among fintech founders, seeing how you can get away with paying your way out of trouble once you become big enough.

Featured Image Credit: ADGM

Climate change is no longer a concern of the future. This year has seen all-time-high temperatures in several countries, as well as the world’s hottest day on record. With that, the need for a green transition has become more apparent than ever. 

For businesses, this is a call to bring emissions under control and focus on their decarbonisation efforts. This is a multi-step process as Dr. Bo Bai – co-founder of MVGX – explains: “From defining the scope of a company’s emissions to measurement, mitigation, offsetting, certification, and financing – all of these activities play a pivotal role in fully transitioning a company’s operations, putting them on a clearer path to meet their net-zero commitments.” 

Making sustainability profitable

Confusing as it may sound, the push for sustainability has to be sustainable. Businesses can’t be expected to ruin their bottomline in the pursuit of decarbonisation.

Without the incentives to motivate action, sustainability investments have been more challenging to implement. This is where technology can play a very important role as it can help to engineer those material incentives to drive action.

– Dr. Bo Bai, MVGX co-founder

Carbon tech has a key role to play in helping align business incentives with those of the environment. Only when sustainable technologies go beyond social benefits and begin improving business operations – through systems which improve energy efficiency or reduce costs – will the push for net zero be feasible.

“The process by which one gets [to net zero] needs to have long-term, competitive advantages for the business.”

Government subsidies and tax breaks can also act as a catalyst to speed up this process. For example, in Singapore, the carbon tax rate is set to increase throughout the 2020s, however, companies can offset up to five percent of their taxable emissions using carbon credits.

This policy can incentivise companies to participate in decarbonisation efforts, allowing carbon markets to develop in the country 

The need for carbon markets

Introduced in the late 90s, carbon credits represent a tonne of carbon dioxide being removed from the atmosphere. By buying credits, companies can offset an equivalent amount of their own emissions. This process – known as carbon trading – is set to play a growing role in the road to net zero. 

Even as businesses attempt to reduce emissions going forward, in many cases, it won’t be possible to avoid them altogether.

“There will always be residuals in this regard, and that’s when offsetting measures via carbon trading come in,” Dr. Bai says. Using carbon credits, companies will be able to negate the impact of these leftover emissions and ensure that they have a net zero impact on the atmosphere. 

For this to work, it’s essential that carbon credits represent exactly what they claim. In recent years, a number of problems surrounding the carbon credit industry have been brought to light, the most concerning being that of fake carbon credits.

Research has found that on numerous occasions, carbon projects have overstated their benefits and credits have been issued under false pretence.

Improving carbon trading 

Founded in 2018 as a platform for carbon trading, MVGX has been working to make the carbon markets more reliable. Using blockchain technology, the platform resolves a key issue which leads to the misuse of carbon credits: double counting. 

Double counting occurs when a company resells its carbon credits after using them to offset its emissions. At this point, the credits should no longer have any value, however, due to a lack of tracking, the same carbon credits can end up being used by multiple parties. This paints an inaccurate picture wherein companies’ emissions are only offset on paper and not in reality. 

MVGX tokenises carbon credits on the blockchain in the form of Carbon Neutrality Tokens (CNT), ensuring clear transparency around the issuance and trading of these credits. 

One of the major obstacles we face right now is the lack of credible tech infrastructure and uniform standards in the Global South. This is critical to ensuring a more interoperable carbon market while enhancing market confidence and safeguarding carbon sovereignty as a whole.

– Dr. Bo Bai, MVGX co-founder

This year, MVGX also announced the establishment of a new subsidiary, MVGX Tech, dedicated to Carbon Software-as-a-Service (SaaS) products and services as part of its flagship platform, Carbon Connect Suite. With its services, MVGX Tech aims to uphold uniform standards for carbon trading and pave the way for better integrity in the carbon markets.

Dr. Bai believes that providing support in these two areas – working with internationally-certified bodies to uphold carbon credit standards and using blockchain technology to bolster carbon trading infrastructure – is the key to rebuilding investor trust and helping countries and companies along their decarbonisation journeys.

Featured Image Credit: MVGX

Also Read: Carbon credits go commercial: URECA CFO sheds light on retail trading platform

Disclaimer: Opinions expressed below belong solely to the author.

American Coinbase, the world’s largest publicly listed crypto exchange, has finally made a landing in Asia, obtaining a Major Payment Institution (MPI) licence from Monetary Authority of Singapore (MAS).

This enables it to offer comprehensive services to both individuals and institutional investors.

But, perhaps even more importantly, it’s another stab against the embattled Binance, the world’s largest crypto exchange, which is gradually being pushed out of lucrative markets in America and Europe — with its future up in the air.

Finally, it’s also another example of how the dream of decentralised digital economy of the future, fuelled by cryptocurrencies built on blockchains beyond governmental control, is slowly falling apart.

A lesson in risky business

The most useful takeaway from this tale of two very different companies operating in the same market is that it appears that Coinbase founders understood the need to establish a reputation via formal means — like submitting the company to regulation and becoming a publicly traded company, which requires transparency of their books.

Quite often you could see crypto projects undertaken by people who believed they could challenge the world’s governments and the established rules of doing business in the global economy.

Cheered on by millions of libertarian fans, envisioning a world slipping out of the grasp of politicians, many continue to operate on or outside of the boundaries of the law. But, more often than not, they are learning a lesson the hard way: not only is it really not possible to challenge the existing order, but most of the potential users don’t want it either.

Coinbase seems to have accepted that in a business perceived as very risky, it has to take on features of an old-school corporation to build trust with customers and win some leniency from regulators.

That didn’t make it immune to lawsuits launched by the American Securities and Exchange Commission (SEC) in June, which allege that the company has been operating as an unregistered securities exchange and broker. But the commission stopped short of accusing Coinbase of fraud, money laundering or pressing charges against its founders — something that Changpgeng Zhao of Binance has to grapple with.

It would appear that the secret to survival in this novel industry is behaving just like traditional financial institutions would. Blend in instead of standing out.

Big is beautiful after all

What it also means is that the emergence of crypto isn’t going to change much about how we deal with finance or use it to do business, invest, or save. Major exchanges behave, essentially, like big banks or brokers of yore.

While they do not necessarily occupy prime real estate in major cities, they too employ thousands of people and, ultimately, are forced to submit themselves to the rule of law of every country they operate in or risk getting cut off from transactions in local fiat currencies, dominance of which no crypto coin has been able to dent.

In fact, the emergence of exchanges themselves has been the first sign of a turn towards centralisation, with few people choosing to transact directly between individual wallets.

With regulatory requirements and preference for locally registered businesses, with at least some physical space and executives present on the ground, we’re really largely back to business as usual. New finance is looking an awful lot like old finance.

The only difference seems to be the underlying technology.

Slow and steady…

…wins the race. It would be quite a remarkable paradox if one of the hottest, innovative industries, promising to change the world, ended up being dominated by slower and more deliberate players. But in a world where people are largely conservative and rules are written by the old guard, it may very well end this way.

While Binance remains the largest crypto exchange by volume, its recent problems in Europe and the US (where it was forced to de facto suspend its operations, despite already having deployed a separate entity to cater to local customers) are undermining its position versus a more established competitor like Coinbase (which was quick to pick up Binance’s stranded customers in America).

Binance planned to obtain a licence in Singapore back in 2021, only to abandon the effort, reportedly due to its inability to fulfil local anti-money laundering requirements.

Rumours had it that the company would be back in the Lion City this year, this time limiting its ambitions to obtaining licensing for custodial services for institutional clients, under the brand Ceffu, but no updates about the effort have been reported since March.

Seeing Coinbase walk away with a full MPI licence may force CZ to question his business choices and whether his way of running Binance is not self-defeating in the long run. After all, nobody is going to rewrite the laws for him and his company. Comply or die.

There’s only one model of operations that’s going to be approved in this business and, if anything, more countries are likely to copy solutions implemented by developed economies, gradually pushing non-compliant participants out.

Coinbase may be smaller, more expensive and not as diverse in its offering — but none of it matters if it has a much better chance of survival. Ultimately, to change the world, you have to still be around when its future is decided.

Featured Image Credit: Depositphotos

After taking the world by storm in 2021, NFTs – as an asset class – have lost the majority of their value today. A study by dappGambl published this September revealed that 95 per cent of NFT collections – representing investments by over 23 million people – have become worthless. 

Top NFT collections such as Bored Ape Yacht Club and DeGods are down over 70 per cent from their all-time-highs. Although cryptocurrencies have seen a recovery since the start of the year, interest in NFTs remains low and it stands to reason whether they were truly just a fad. 

“I think that one of the reasons that the NFT market kicked off was because of the low interest rate environment and excessive monetary printing,” says blockchain researcher Eric Wall. “In that kind of environment, no one wants to hold cash and that gives the basis for new economic instruments to grow.” 

That being said – even with the speculative hype now over and the financial landscape overturned – Wall believes there is still something of substance behind NFTs.

“When people get out of college in the modern era, it’s difficult to make friends and find communities. The NFT space gave way for people to congregate in digital communities where they can define their own purposes.” 

What’s next for NFTs?

People may no longer want to spend thousands on profile pictures, but that doesn’t need to spell the end of NFTs as a concept. Perhaps, they just need to serve new and different purposes. Zedd Yin – co-founder of Magic Eden, one of the world’s leading NFT marketplaces – believes this will be key in the next phase of growth for NFTs. 

Yin compares it to cryptocurrency, which has seen each market cycle led by a different set of innovations, from the ICO boom of 2017 to the DeFi summer in 2020. “Our view is that the next set of innovations that happen in NFTs are not going to look the same – the form factor is going to be different,” he explains. 

As such, top industry players have a key role to play in identifying innovative ideas and bringing them to the spotlight. “The grassroots is one area where we want to spend a lot more time,” Yin divulges Magic Eden’s plans to this end. 

Alexei Falin – co-founder of NFT marketplace Rarible – sheds light on the opposite end of the spectrum, highlighting the continued interest from traditional companies entering the NFT space. “We have a number of enterprise clients taking their first steps in Web3 with our help,” he says. 

Recently, Rarible worked with Mattel – the company behind Barbie and Hot Wheels – on digital collectibles representing their iconic toys. “You will be surprised, but it saw over a million transactions in the last three months,” Falin says. Even though the NFTs sold for really low prices, this goes to show that the demand for digital collectibles still exists. 

Next in NFT innovation

Much like the broader crypto industry, utility is a key trend driving innovation in the NFT space. This encompasses a variety of potential use-cases, from NFTs serving as in-game items to granting access to online communities. 

Wall speaks about Orb Land, a project of his wherein NFTs play a role akin to a subscription service. The NFTs, or orbs, are issued by influential personalities and buyers of the NFT are entitled to ask them a question every seven to 10 days.

Unlike other NFTs which come with a one-time cost, orb holders must commit a pool of funds which is drained over time. This model promotes the resale of the NFTs, allowing more people to access the Q&A service on offer.

Web3 investor Steve Lee adds on with potential use-cases for NFTs in the entertainment and retail space. In recent years, sneakers have gained significant popularity as collectible items. Lee believes that NFTs could further enhance this experience. For example, Nike could issue NFTs of their most iconic shoe designs, offering in-store discounts to those who own them. It would be a novel way for the company to engage their customer base and delve into the world of Web3. 

What’s stopping NFT adoption?

As the crypto markets remain stagnant, it’s tough to envision a recovery for NFTs in the near future. After all, the Web3 onboarding process begins with a crypto wallet and NFTs only become accessible thereafter.

There are still ways to go in making this process less complex and easy for retail users to approach. “The infrastructure is definitely lacking,” says Falin. 

Building onto his earlier point about form factors, Yin adds, “The only thing that has taken off in NFTs is [digital profile pictures], which is quite niche. That’s why we spend a lot of time finding opportunities with gaming companies, musicians, and artists to see if we can utilise NFTs as a technology to enable them.” He believes that these utilities could be key in the search for new users and adopters.

Featured Image Credit: Getty Images

Also Read: Token2049: Ripple and BitGo CEOs on the future of crypto amid regulatory uncertainty

It might not be a conventional approach, but playing poker can teach someone a fair bit about financial trading. As Selini Capital’s CIO, Jordi Alexander, explains, “The mental training is good. Just having a sense of probabilities and being able to visualise the probability of different outcomes is useful in trading.”

The same way a poker player would gauge their odds of winning using the cards in front of them, a trader must consider a variety of technical and quantitative factors to decide if an asset is worth betting on. “Some of the psychology is transferable in terms of understanding that results aren’t necessarily what’s important, but rather the process. If the process is good, eventually the results come.”

Emotions have no place at a poker table nor on the trading floor, at least not for those looking to win. After all, no one gets a hundred percent of their bets right and that’s something which professionals must learn to accept.

“Sometimes things are out of your control, even if you do everything correctly,” Alexander says.

A day in the life of a crypto trader

Alexander’s experiments with probability date back to 2009 when he began playing poker professionally. He pursued this for four years before branching out into trading in the traditional financial markets. In 2021, crypto caught his eye and since then, it has accounted for a majority of his trading activity.

Being systematic and process-driven is a key part of Alexander’s trading philosophy. “We’re very algorithm-based,” he explains.

“For us, it’s not just people clicking buttons, it’s a lot of systematic models.” He cites game theory as a key framework behind his philosophy. This involves considering the motivations and actions of other influential players and making moves accordingly.

“With crypto, there are several very large whales that can have a good amount of influence on the market. From a game theory perspective, you have to kind of predict some of these other influential people’s moves and position yourself,” Alexander says. 

Speaking of his role as CIO at Selini Capital, Alexander describes it as being a “firefighter”, constantly running around and fixing problems which come up. With crypto markets as dynamic as they are, every day brings new developments which traders need to account for as part of their strategy. 

Beyond developments which directly impact crypto – such as new regulations or partnerships – Alexander mentions that there’s also a need to track global macro news. “[Aspects such as] equity markets and interest rates will affect prices too.” 

Crypto and the global economy

Although it’s not a strict correlation, crypto prices have often been affected by trends in other financial markets. Alexander describes crypto as an intersection between NASDAQ – an index largely moved by technology stocks – and gold. 

“There’s an element of crypto where it’s just like a tech stock – it’s like a Silicon Valley growth startup. And then there’s an element where we’re looking at it more as a commodity, especially Bitcoin and maybe Ethereum.”

Alexander believes that in the last few years, the strongest correlation was between crypto and equities. However, this is now changing: “We’re increasingly seeing it more as a commodity and being more linked to interest rates and gold.” 

There is also an emerging divergence between Bitcoin and the rest of crypto. This can be seen, for example, in regulatory proceedings in the US. Earlier this year, Gary Gensler – Chairperson of the U.S. Securities and Exchange Commission (SEC) – declared the SEC’s view that all cryptocurrencies apart from Bitcoin should be treated as securities. 

Up till now, the crypto markets have primarily been driven by Bitcoin, with other cryptocurrencies closely following its price movements. This is likely to change as the crypto market grows and there is greater clarity around the purpose which different cryptocurrencies serve. Altcoins might find themselves lumped in with tech stocks while Bitcoin grows further into a commodity. 

The future of crypto trading

Market growth and growing institutional participation will also change the crypto trading landscape moving forward. 

Currently, the crypto market is rife with inefficiencies and compared to equity markets, there is less of a gap between the information and tools available to institutional investors and retail traders. This has proven beneficial for the latter as they enjoy more of a level playing field.

“Working with data is different [between crypto and traditional markets]. Traditional exchanges have something that’s called ‘level three data’, which is full order-by-order information. In crypto, sometimes it’s similar, but other times, you feel like you’re MacGyver with barbed wire and a piece of cloth and you need to put them together somehow.”

As is the case with any market though, crypto markets are expected to become more efficient over time and the kind of opportunities which retail traders have seen in the past might dwindle as a result. 

Featured Image Credit: Ishan Singh / Token2049 Singapore 2023

Also Read: Token2049: Ripple and BitGo CEOs on the future of crypto amid regulatory uncertainty

Disclaimer: Unless stated otherwise, any opinions expressed below belong solely to the author.

Binance, like most crypto companies, hasn’t had a particularly good year, following the deflation of the crypto bubble and spectacular collapse of one of its main competitors, FTX, in November last year.

That last event in particular has brought attention of regulators around the globe, who are now trying to rein in crypto companies before they can do too much damage.

According to a recent report by The Wall Street Journal (WSJ), there are, however, some things that the largest crypto exchange in the world only has itself — and its founder — to blame for.

Do-or-die

While Binance remains the biggest player worldwide, handling about 50 per cent of all crypto-to-crypto trades, this proportion is down from 70 per cent since the beginning of the year, according to tracking firm Kaiko.

At the same time, its position in most developed markets is dwindling — currently verging on non-existence in the US, following Securities and Exchange Commission (SEC) lawsuit filed against it in June, which saw its USD trading wiped out after its banking partners suspended transactions with the exchange.

To be fair to Binance, US-based Coinbase was also sued for similar infringements — i.e. that they illegally listed unregistered securities in the form of several cryptocurrencies accessible by US investors. The list notably does not include Bitcoin or Ether, suggesting that SEC was really only looking for a good reason to litigate rather than regulate.

However, it did receive additional charges of misusing customers’ funds for the benefit of the company and Changpeng Zhao (CZ), with money allegedly diverted to an entity he owns, called Sigma Chain.

In addition, Coinbase is an already publicly-traded company, located in the US, as opposed to loose network of entities that Binance consists of, with its founder residing in the safety of UAE, which doesn’t have an extradition treaty with the US.

This is part of the reason why fortunes of both companies following their respective lawsuits couldn’t have been different:

The roughly 20 per cent market share that Binance.US still boasted in dollar-denominated trade in the first half of the year has evaporated after its American banking partners suspended cooperation with the platform. Coinbase was perfectly positioned to pick it up and only strengthen its standing in the world’s largest economy.

If data alone isn’t convincing enough, WSJ reported seeing an internal message from Yi He, Binance’s co-founder and chief marketing officer, to Binance staff, circulated in August:

“Every battle is a do-or-die situation, and the only thing that can defeat us is ourselves. We have won countless times, and we need to win this time as well.”

Source: WSJ

She isn’t alone in sounding the alarm.

Does the captain want to go down with the ship?

More than a dozen top executives — including the firm’s general counsel, chief strategy officer, head of investigations and a senior vice president for compliance — left the company following the SEC lawsuit, while over 1,500 employees were made redundant as a cost-cutting measure.

The list now also includes Binance.US CEO, Brian Shroder, who catapulted himself to safety earlier this month — but not before urging CZ to distance himself from the company so it can resume business.

Following the onset of crypto winter and now loss of access to banking in America, Binance.US saw its revenue drop by 70 per cent year to date — a trend that is likely to accelerate considering the freeze on USD transactions went into effect only in mid-June.

It means that it is now just a hollowed out crypto-only shell of its former self, without access to convenient on/off-ramping (i.e. buying and selling crypto for fiat), which makes it useless for most regular customers.

“Shroder told employees Zhao would need to resolve “his regulatory matters, put his .US holdings in a blind trust, or sell his shares” in order for the U.S. platform to maintain its growth initiative. Those steps would allow the company to unblock banking relationships and get licenses, he said.”

Source: WSJ

According to WSJ, talks about the future of CZ and his possible resignation have been held between the company and the US Department of Justice for many months, but no decision has been made yet.

It is pretty obvious, however, that he is considered as much a problem as the grey area his company occupies.

An elusive Chinese billionaire, running a global Web 3.0 fintech business out of the Emirates isn’t something — or someone — that Americans are happy to trust unconditionally, let alone grow ever more influential and richer in the process, often at the expense of US customers.

And things are no better in Europe…

Despite succeeding in registration in France, Binance is now under investigation by local prosecutors, while other countries, such as Germany, Belgium or the Netherlands, have either declined to issue a license or have outright barred the company from doing business within their borders.

The firm has also lost access to British pound deposits and withdrawals, after its partner Paysafe suspended the service and no replacement could be found thus far.

Bit by bit, Binance is being pushed out of the West, forced to rely on customers in less developed countries, ceding very lucrative markets to competition, while CZ defiantly remains at the helm.

Can he mount a counterattack when regulation becomes better defined in a year or two? Or is Binance going to be driven to the brink before he decides to step down in order to save the ship from sinking? This isn’t a choice captains typically have the luxury of making.

“You just can’t quantify what would happen to the industry if Binance disappeared, given it has been responsible for fostering a huge amount of innovation and growth,” said Anthony Georgiades, a general partner at Innovating Capital, a fund that invests in early-growth companies.

Source: WSJ

Binance is not indispensable

Zhao has to bear in mind that if Binance followed the fate of FTX, very few in the West would be disappointed.

Regulators would have one headache less to deal with, politicians would no longer have to worry about a Chinese billionaire with a murky background, while locally-registered competitors would quickly gobble up the stranded users.

Yes, thousands — maybe even millions — of people would lose some money, but authorities could even see it as a welcome lesson for all of them: don’t deal with companies and people operating outside of established boundaries.

Trust in crypto would be shaken again, further deterring millions of laymen from dipping their toes into the technology. This is certainly not good news to all of the Web 3.0 advocates, but another welcome earthquake for governments around the world, which seek to establish their own national digital currencies and write their own rules for everybody else.

Aside from running an illegal securities’ exchange in the US, Binance is investigated in several countries for money-laundering, tax evasion and breaches of sanctions on Russia, following its invasion of Ukraine. All of these are serious allegations which also serve as an example of how antiquated laws do not really fit the modern, borderless reality of the world that the internet has fostered.

This battle isn’t really about a particular company skirting the law by offering risky financial services, but rather, something greater: the shape of digital economy of the future, and who gets to define it.

Concerned legislators are using their leverage to make everybody fall in line or risk obliteration. CZ would be smart to remember that. Even if his intentions and actions are pure, the fight is never going to be fair, since the rules are made on the fly by the very people who have challenged him.

Featured Image Credit: IrynaBudanova / depositphotos and Stephen McCarthy/Web Summit via Sportsfile